The Twitter goldmine

How on earth can you make money out of social networking - and in particular from Twitter? A question I've wrestled with but suddenly I'm a little clearer.

The answer is in mining the vast flood of data now produced by hundreds of millions of people sharing information over theses networks and it is the reason, some say, that Google is now getting very nervous about the likes of Twitter and Facebook.

At least that was my conclusion after a chat with Nick Halstead, founder of Tweetmeme, one of the few British web businesses to be making waves in Silicon Valley.

Tweetmeme is one of the many small fish which swim along with the great whale that is Twitter. Its main claim to fame is that it invented the button, a simple web accessory that appears on millions of sites, allowing users to share a link to an article on Twitter.

Nick Halstead claims that the Tweetmeme button has been vital in making Twitter a place where people share information by posting links.

"When we started a couple of years back, 100,000 links were being shared a day - now that's risen to more than 12m a day, and we're largely responsible for that."

Yesterday Twitter unveiled its own share button which looked at first like curtains for Tweetmeme. But at the same time the San Francisco company announced a partnership deal with Nick Halstead's tiny business.

It will help roll out the new button and more importantly will get continued access to the torrent of data emerging from the zillions of tweets now produced every day.

That's what Tweetmeme's business depends on - it acts as a kind of supercharged social search engine for clients who pay for a customised Twitter feed. So, for instance, it has produced a small business channel for one customer eager to know what's being said about and by small firms.

Another client is eager to find out what's being said about the search engine optimisation industry on Twitter, and then there's an American Christian group looking for references to religion.

A simple Twitter search won't do the trick, it will be difficult to filter out the noise and get what you want. What you need is direct access to what Nick Halstead calls Twitter's firehose, and sophisticated tools to mine its data.

Giant firms like Microsoft and Facebook are now paying millions to Twitter for access to this data so a tiny business like Tweetmeme, with its 14 London based staff, is grateful for the chance to swim in the same pool.

It explains why the boss of a tiny cash-strapped UK start-up has made dozens of trips to Silicon Valley over the last two years, determined to build a close relationship with the business on which its whole future depends.

And Nick Halstead thinks this new social data business model has big implications for the undisputed king of the search world:

"The world is changing from one where you 'spider' the web - what Google does - to one where you look at what everybody is sharing on social networks. That's why Google is so scared."

I'm just back from a holiday in California, where I dropped into Twitter's San Francisco headquarters, and found row after row of empty desks. The company made it clear that they would soon be filled as its workforce continues to expand at a jaw-dropping rate. I wondered just how their salaries would be paid, but now I'm a little clearer.

Google became hugely rich and powerful after it discovered that search results can be turned into gold. Now Twitter, and companies like Tweetmeme, are realising that vast quantities of social data, with their clues as to what the world is talking about and what consumers want, can also be a goldmine.

The battle between the old and new models of search is going to be one of the biggest business stories of the next decade.

Comment number 1.

It will be interesting to see how this desire to make money from information on social networking sites comes into conflict with the increasing desire for privacy. Will people shut down their information more and more as trouble appears, stemming the money flow, or will the masses who don't give a fig about information privacy, and therefore may have an equally lax response to targeted advertising allow this market to be supported?

Comment number 3.

I don't think that it's clear that there is such a thing. It seems to me that people are choosing to publish more and more about themselves, but react very badly to surprises of the sort we saw with the start of Google Buzz, and various previous Facebook settings revamps.

What people desire isn't the privacy per se, it's the choice about, and control over, what to publish and to whom. When given that choice many people are happy to publish a lot of information, and to publish it widely.

Comment number 6.

This is an excellent post. Not even a tiny fraction of what can be extracted from this gold mine of user behavior data and user expressions has been harvested well so far. Twitter is merely a sign of the times. Folks do want to express themselves, they want to be heard and they want to listen. I believe that it is technology that is not keeping up fast enough with user needs not the other way round.

Comment number 7.

Of course there's money in twitter, imagine if you were a government minister and you announced a policy, you would see a sudden rise in tweets along with instant feedback on your announcement.For example filtering UK tweets for the words 'Gov' and 'Milk' and putting them into a realtime tagcloud would probably get a swift reversal of policy.The same is true for business announcements (such as the BBC announcing a doubling of the licence fee)

There are of course loads of paid for phone apps that utilise Twitter like the one that uses Google voice to tweet by voice.

Comment number 8.

Nick, now that you have seen first hand what you and the BBC seem to have been oblivious to before (the fact that Twitter does generate revenue for itself and others), will the BBC stop constantly plugging it?

Every time Twitter gets a reference on BBC News, television or radio, Twitter Inc. stands to profit. This is a clear breach of the BBC's editorial guidelines - especially when the Twitter logo is used on programmes like Newsnight.

Comment number 9.

"It will be interesting to see how this desire to make money from information on social networking sites comes into conflict with the increasing desire for privacy"

Absolutely no problem with privacy - the USA does not have any - anyone who posts anything of a private or semi-private nature is a just a fool or ignorant. The security service will mine your posts - if you don't understand this then you really should not be allowed out! Nothing should be posted on any insecure non-encrypted on-line service without being prepared to have it read by everyone needs their head examining - and that includes voice communications. This is the reality that the service operators do not tell you.

Twitter is great for self-publicists and exhibitionist as is Facebook, but the one thing they are not is in any way secure or private.

Comment number 10.

How on earth can you make money out of social networking - and in particular from Twitter?

Simple, write a boring, tedious blog about it at nauseatingly regular intervals, despite your readership begging you to stop. Then get your gullible organisation to pay you for doing it. A cynic might suggest that this amounts to product placement for which there is a financial reward.

Comment number 11.

So there's this vast amount of data, largely consisting of what people say...and some people are working to break it down into various topics...so they can then, hopefully, sift out some small nugget of info that gives them an insight into something...

and they're prepared to pay millions for access to this data???

When they could just as easily read the BBC's comments, or eavesdrop on their local bus?

This will turn out to be a colossal waste of money. It's just 'vox populi' on a grand scale, and will turn out to be as hollow and empty as the 'great tulip mania' of 1637. Still, a lot of people made money out of that before it burst too, so no doubt some will from this. But a lot will find themselves broke with a lot of useless data on their hands too. A fool and his money are soon parted...

Comment number 13.

The danger is the creation of a Twitter bubble - increasingly Twitter users are organisations or individuals with an agenda, either marketing or political. There's a risk that the data mined no longer reflects a public mood, but is very much interpreted as that, enabling those with an agenda, to set a wider agenda.

Comment number 16.

Does anyone see any irony in the fact that the head of a small tweet company is making many trips to California to set this up! Surely if this kind of networking is so powerful you shouldn't have to keep flying there to meet in person? Not a good advert for the product.

Comment number 17.

Isn't the big prize for Twitter to find a way for advertisers to target individuals (and measure results) - thats how Google got rich. Twitter is great for bloggers and media owners to narrowcast their messages - and by definition all followers have the fact that they follow in common - link effective advertising to the subject being tweeted about and you have good business model. Simples!

Comment number 18.

I have to disagree with comment number 2 as well, Many people use social network sites (Facebook) for personal information, i.e photos of their children, family photos etc. This isn’t what Twitter is about it’s about what I want to say and if my friends don’t like it then I really don’t mind, where as on Facebook I would have to worry about what my mum or sisters might see or say if I post something controversial on my status update.Twitter free's you from these constraints by basically allowing you nothing but these status updates to say what you really want to without the labour of keeping a blog (and the size of the tweets stop you rambling as I am now)My facebook page is now purely for friends and family experiences sharing(with my setting fully locked down for my privacy)My true feelings and thought are expressed through twitter where they are read by my girlfriend, my close friends and by random ‘followers’My twitter profile is fully open, anyone can read it, anyone can copy it, anyone can analyse it, I know that, I accept that and I don’t mind… I already use google and yahoo ,who do the same on my searches, I URL shortening services that make their money from selling the data about who clicked through… from where… how many times etc etc etc.Its no different than facebook apps makers do.. I mean seriously have you ever read the terms of use on them?

Comment number 20.

Not convinced you can build a business on what you don't own. Google built its business on content it did not own and as its search results have almost completely been taken over by SEO marketing. There's nothing Google can do since it did not create the content in the first place. This will happen to Twitter much quicker.

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